A Billionaire Hit by Sanctions Makes Life Hard for Nordic Banks

(Bloomberg) -- As banks in the Nordic region go out of their way to prove all their dealings are clean, a lawsuit brought by a Russian billionaire has exposed some of the challenges they face.

Nordea Bank Abp is among lenders waiting to hear from a Finnish court whether it can refuse to process payments made by billionaire Boris Rotenberg. The oligarch was placed on a list of sanctioned individuals by the U.S. back in 2014. But the 61-year-old, who has dual Russian and Finnish citizenship, wasn’t targeted by similar European Union sanctions. He says that means the Helsinki-based bank has no right to block his transactions.

The billionaire is suing Svenska Handelsbanken AB for refusing to accept cross-border transactions, and Nordea, OP Corporate Bank Oyj and Danske Bank A/S for not processing payments he’s making to vendors. The four firms now risk either breaching U.S. sanctions or being sued under Finnish law. They faced a Dec. 14 deadline to respond to Rotenberg’s complaint. Handelsbanken was given an extension until Dec. 21.

Julie Galbo, Nordea’s head of risk management, says that “the case illustrates the complexities of international regulation.” It also shows how confusing cross-border banking can get “when international regulation provides different regulatory regimes,” she said.

Galbo declined to comment further on the specific case beyond saying that Nordea is working closely with the authorities. Spokespeople for Danske, Handelsbanken and OP declined to comment.

The legal battle between the Nordic banks and a billionaire targeted by U.S. sanctions comes amid heightened focus on money laundering in the region. Danske Bank is waiting to learn how much it may have to pay in fines after the U.S. Justice Department opened a criminal investigation into allegations of money laundering. Nordea has also been investigated for laundering, though on a much smaller scale.

The Danske case, which involves as much as $230 billion in potentially suspicious flows from the former Soviet Union, covers the years 2007 to 2015. Since then it, and other Nordic banks, have spent vast amounts of money to build up iron-clad compliance departments designed to screen and catch anything that looks remotely suspicious.

Rotenberg was among associates of President Vladimir Putin who were placed under U.S. sanctions more than four years ago in response to Russia’s annexation of Crimea. The billionaire, who moved to Finland after the collapse of the Soviet Union, has said that his inability to get a Nordic bank to process his transactions means he can’t pay his car tax or electricity bills, according to court documents filed on Oct. 4. Rotenberg says the U.S. sanctions list isn’t legally binding in Europe.

Galbo at Nordea says the case shows how urgent the need is for better international coordination.

To contact the reporters on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net;Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net

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